Divestment activity to continue in March qtr

2 mergers, 3 IPOs, 3 offers for sale, another tranche of Bharat 22 ETF by March-end

WiththeCentreaimingtosubstantially overshootitsoriginaldisinvestmenttargetfor 2017-18, muchactivityisplannedfortherest ofthefinancialyear. Itplanstocompletetwo mergersamongstate-ownedcompanies, threemoreofinitialpublicofferingsofequity, threeoffers-for-saleandasecondtrancheof itsBharat22exchangetradedfund.

With the Centre aiming to substantially overshoot its original disinvestment target for 2017-18, much activity is planned for the rest of the financial year. It plans to complete two mergers among state-owned companies, three more of initial public offerings (IPOs) of equity, three offers for sale and a second tranche of its Bharat 22 exchange traded fund (ETF). Officials are confident of completing the takeover by Oil and Natural Gas Corporation of Hindustan Petroleum in the next two months. That alone will garner around ~30,000 crore for the exchequer.

State-owned construction company NBCC bought Hindustan Steelworks Construction earlier this year; it might buy another smaller construction and engineering unit in the state sector, Business Standard has learnt. The candidates are Hindustan Prefab, Engineering Projects India, NPCC, and HSCC. It is learnt one of these could be taken over by NBCC this financial year (FY18).

“There has been massive interest among investors for the Bharat 22 ETF. A call will be taken soon on whether to launch a second tranche in the JanuaryMarch quarter,” said a senior government official. The 22-stock ETF, launched last month, earned the Centre ~14,500 crore after being subscribed fourfold.

After the market debuts of General | ONGC-HPCL merger to be completed in next two months | NBCC to buy another smaller construction PSU this fiscal year | HAL, RITES, Ircon IPOs could

be completed by March 31 | Thee offers-for-sale

could be done soon | Officials planning another tranche of Bharat 22 after investor interest Insurance Corporation and New India Assurance earlier this year, the Centre will carry out at least three more IPOs before March 31. These are likely to be of defence behemoth Hindustan Aeronautics and two railway companies, Ircon and RITES.

Work continues on other planned IPOs, like those of IRCTC, IRFC, Garden Reach Shipbuilders, Bharat Dynamics, and Mazagon Dockyards. However, these are unlikely to be completed in FY18.

Preparation is also on for a number of offers for sale. The plans are for a 10 per cent stake in NHPC, Power Finance Corporation, and Steel Authority of India; 15 per cent in NLC, five per cent in Rural Electrification Corporation, and three per cent in IndianOil. Sources say three would be completed before the year is out. In August, a seven per cent stake was sold in NTPC. Disinvestment targets for the year might not only be met for the first time since 2009, but exceeded by as much as ~20,000 crore. This will compensate for some of the shortfall in other revenue heads. The total divestment target for FY18 is ~72,500 crore, highest for any so far.

The proceeds are ~52,500 crore at present, more than 2016-17’s Revised Estimate of ~45,500 crore.